Asia-Pacific's Prospects Under US-China Tensions: Michael Green / CEO, United States Studies Centre, University of Sydney

Hello and welcome to DEEPER LOOK from New York.

I'm Del Irani, it's great to have your company.

When US President Joe Biden met his Chinese counterpart Xi Jinping in Bali this year, the world was watching...

This was, after all, their first in-person meeting since President Biden took office.

It comes as relations between the US & China have been tense.

Disagreements about trade and economy, as well as security issues over Taiwan and the South China Sea, have raised concerns, most especially among allies and neighbors in the Asia-pacific region.

So, just how significant was this in-person meeting?

And how will US-China relations affect the future of the Asia-Pacific region?

Joining me now to talk more about this is Michael Green.

He served as a senior official on the National Security Council, specializing in Asia policy during the George W. Bush administration.

He's now the CEO of the United States Studies Center at the University of Sydney.

And he joins me now.

Welcome to the program, Dr. Green.

Great to have you with us.

Thanks very much, Del.

So, what did you think about that first in-person meeting between President Biden and President Xi Jinping, that took place on the sidelines of the G20 Summit in Indonesia?

Well, my first thought was, this is the way it is supposed to be.

It should be very normal, that the leader of the world's largest economy and second largest economy would meet, and talk about issues that face each country and the world.

The two leaders agreed trying to find some areas to cooperate, but they didn't fundamentally change course, on the issues that now drive their geopolitical competition.

So, you know, it's the way things should be, but it's not the way things work.

We're not going back to the US-China relationship we had five or ten years ago.

Do we have any indications that the relations between the US and China might change in the coming months or coming years, given how tense things have been?

Under Xi Jinping, China has clearly sought to displace the United States as the preeminent power in the Indo-Pacific or Asia-Pacific region.

It started as early as 2014, when Xi Jinping gave a major speech in Shanghai, calling for countries within East Asia to self-solve security without outside powers

and continue through the artificial island build-up in the South China Sea, and coercion, military pressure, economic embargoes against India, Australia, Korea, Japan.

So, you know, I think it's broadly accepted in the US and Japan and Australia that China is pursuing a revisionist strategy of trying to assert itself as the major player in the region.

What we don't know is how much is Xi Jinping willing to risk to do that?

Is he willing to risk war?

Is he willing to risk conflict?

My take away from the summit was, he's not really willing to risk war.

And I think he tried to signal to Biden that there's going to be intense competition, but he's not looking...

and China can't handle conflict.

So, in that sense, it was... at least, the atmosphere that was established, was a little more positive than what we've seen, because before Xi and Biden met,

people really wondering: could there be a conflict between the US and China?

I think now, there's a sense that it's a dangerous road ahead.

Xi Jinping is not backing down.

US side, US allies are not going to accede to China's demands, but at least there's a sense that there's a floor under the competition,

that both leaders really don't want this to get out of control.

President Biden in October this year revealed the US national security strategy, and he identified China as America's most consequential geopolitical challenge.

And one of the steps he actually took was to impose export controls, that will curtail China's access to semiconductor technology.

And how could this impact the future of the relations between the US and China?

Is it likely to strain relations even further?

Well, the US side, and I think Japan and some other advanced industrial economies, identified artificial intelligence as the key to dominance - economic, but also military dominance in the rest of the 21st century.

And some of the key ingredients, or key elements of artificial intelligence, include big data, computational science, but especially semiconductors, the ability to process information very, very quickly.

And semiconductors are an area where the US, Korea, Japan, Taiwan, the Netherlands, about five countries, have a 15-year head start over China.

And so, these export controls are basically designed to stop China from getting that technology; which China has done, and is rapidly trying to catch up.

Sometimes through commercial means, sometimes through investing and researching at home, but often, very often, through intellectual property rights theft and stealing technology.

When I was in Washington, two years ago, at the Center for Strategic and International Studies, we surveyed the public and also foreign policy experts.

And there was broad support for this then.

We surveyed again, in September 2022, from the US Study Center in Sydney, and we asked the public in the US, Australia, and Japan, do you support limiting technology in this way?

And very much they do.

We asked if you, as a consumer, would you pay more money - $100 or $200 more - for a cell phone, if you were told it's not made in China?

And majorities, large majorities in the US, Australia and Japan said yes.

So, there's public support, there's congressional support, there's parliamentary support for limiting China's access to this most critical technology related to semiconductors.

These limitations are going to cause a lot of big companies, Apple, Microsoft, to start shifting supply chains away from China.

But in our survey, when we asked - do you favor decoupling, or just no economic relations with China, nobody supports that.

Fewer than 20%.

People want to sell soybeans, coal, they want to buy products cheap.

So, I think as long as most commercial activity continues, the relationship will not spiral into conflict.

Recently, the US held its midterm elections.

Can you tell us how do you think these results will impact President Biden's policy towards the Asia-Pacific region and, in particular, China?

Well, it will not be fun to work for Joe Biden in the White House over the next two years, because the Republican-controlled House of Representatives will do a lot of investigations.

And, you know, they'll have a platform now to call President Biden's son, Hunter Biden, to testify about his missing laptop, and all these scandals.

However, I actually think, on balance, it's not a bad thing, maybe even a good thing, for the US position in Asia and the Indo-Pacific

to have this divided government, Republican House, Democratic Senate, Democratic White House.

And the reason is, number one, there's very strong bipartisan consensus.

You can see it in legislation, you can see it in polling, that Japan, Australia—our allies—are critical to us, that China is a competitor, that we have to organize to compete.

We need to invest in semiconductors, we need to control exports.

The policy debate around China is not partisan.

It's very bipartisan.

And number two, a Republican House, although they will, you know, torment Joe Biden on domestic political things, on defense, on foreign affairs and trade, they're gonna push Biden to do more.

They're gonna push toward defense spending, they're gonna push for more trade policy.

And so, it'll look bad, it'll be unpleasant, but on Indo-Pacific allies, on China policy, I actually think, on balance, it's not the end of the world.

It might even be helpful for the administration to get this pressure from Congress.

What role do you think the US can play?

Is there an opportunity here for the US to step in as a leadership role, and build more autonomous trade relations with countries in Asia, in order to sort of counter-balance the huge, you know, power that China has, in terms of the,

you know, its economy and its trade potential in the region?

I think the key is to build rules that pressure China to not steal intellectual property, to open up its economy more, to compete fairly.

The US and US allies had a strategy to do that.

And it was through the so-called Trans-Pacific Partnership, this agreement of 11, eventually 12 economies, that basically agreed with open economic rules.

And the idea was we would sign this huge agreement, which has Japan, US, Canada, Korea was expected to join, Australia, much more economic power than China has, in aggregate.

And then to go to China collectively and say, okay, you'd like to grow.

We'd like to trade with you.

We'll lower the barriers to you joining this group.

But you've got to make some reforms.

And there were many Chinese business leaders and economists who thought this would be great for China.

That breaking down these barriers would be good.

But the Trump administration pulled out, and Joe Biden said he's not joining either.

So, this is a huge gap in American strategy that our closest friends Japan, Australia, think is a mistake.

The administration has announced something called IPEF, the Indo-Pacific Economic Framework, which is essentially a dialogue about digital economy, and the environmental economic issues, and labor rights.

But it's just a talk show.

It's a dialogue right now.

I think if the administration and US wants to get serious about rulemaking to deal with China, alongside our friends and allies, there has got to be a more serious effort than we see right now.

I think a future US government, maybe not Joe Biden, maybe Joe Biden, is going to find itself looking to make our trade engagement and trade strategy more serious.

Why?

Because there is agreement that China has a major geopolitical challenge for us.

And we've always dealt with geopolitical challenges in Asia, since the second world war, with economic engagement, trade agreements, rulemaking, and we're not doing it really effectively now.

So, I think there will be geopolitical pressure on the administration to do more.

And there are a lot of American farmers, and ranchers, and small businesses, who want to export more to Asia.

So, I'm on the optimistic side on this one.

I think eventually, we'll get there, but not in the near term.

In American politics right now, we're just unforgiving on trade policy.

Now, I quickly want to touch on this issue of regional security.

Of course, there is the QUAD Alliance, which is Australia, India, Japan and the US.

You know, can you just explain really the significance of this alliance?

And do you really believe that this is a security framework, that could counter China's rise?

That these countries could come together, if needed, you know, if there was a security issue over whether it's Taiwan or the South China Sea?

Well, I was actually in the White House on December 26, 2004, when this massive earthquake and tsunami struck the Indian Ocean.

And, you know, the US, Australia, Japan, India agreed to form a joint task force to provide emergency rescue and relief.

And we did it, I think, in less than a day.

It was so quick, that we formed this group of four powerful maritime democracies to save people in Banda Aceh, Indonesia or Sri Lanka, or the Andaman Islands, and Thailand.

And these four maritime democracies in an instant realize we have the navies, we have the shared democratic values, we have the interest in maritime security to do this.

And it was out of that emergency response that the QUAD grew as a more political formation.

But then that raises the question, if we ever had a real major crisis with China, would these four countries become an alliance?

Yeah, would they?

I don't know.

I don't know.

But neither does China.

They could.

If the US, Japanese, Australian and Indian navies decided that they were going to stop China from importing anything, it would strangle China.

So just the possibility that these four maritime democracies could become an alliance is a useful thing.

It's a reminder to Beijing: if you start killing Indian troops in the Himalayas, boycotting Australia,

you know, swarming around the Senkaku Islands to pressure Japan, if you keep doing that, you're gonna get something you don't want, which is a NATO in Asia to deal with.

But we don't want to do it, China!

You know, we want to cooperate with you.

And so, I think it's a not-so-subtle, but important reminder that China's bullying in the region has consequences.

When it came to it, if you had a Taiwan conflict, my guess is India would not be very involved.

But Japan and Australia probably would.

If you had a crisis in Southeast Asia, maybe all four would.

It's very hard to predict what this will look like.

It depends on the geopolitics at the time, and each of the crises.

But just the fact that these four big navies and maritime democracies are trusting each other and getting along, is a useful reminder to China,

that there're limits to how much, you know, countries will tolerate in terms of bullying.

Well, Dr. Green, excellent insights there.

Thank you so much for joining us on the program.

Thank you very much.

China's expansion under President Xi Jinping has created an impetus to develop a new economic and security framework in the Asia-Pacific region.

Join us next time, as we look at how Australia is responding to a rising China, and continue our conversation with Dr. Michael Green on "DEEPER LOOK from New York."

I'm Del Irani, thanks for your company.

I'll see you then.